When Are Canadian Taxes Due for Businesses?

When Your Taxes Are Due Depends on How Your Business is Structured

When are Canadian Taxes Due?. Image (c) Erik Palmer / Getty Images

Question: When Are Canadian Taxes Due for Businesses?

Answer:

The Canadian taxes due date depends on how your business is structured.

Sole Proprietorships and Partnerships

If your business is a sole proprietorship or partnership you declare your business income on form T2125, which is part of the T1 Personal Income Tax ReturnDo You Need to Fill Out Canadian Income Tax Form T2125?

You have until June 15th to file your Canadian income tax.

But beware! Even if you're not filing your income tax until June 15th, though, you still need to pay any income tax due by April 30th, to avoid income tax penalties

Using a Fiscal Year End Other Than December 31

Note that you can choose to have a business fiscal year other than the calendar year as a sole proprietor or partner. For example, if your business is seasonal it may be advantageous to have a fiscal year end that corresponds to seasonal slow downs. 

To change your fiscal year end you must apply to the Canada Revenue Agency (CRA). See Change the Fiscal Year End of a Canadian Business. Note that:

  • Approval is not guaranteed- the CRA may reject your application if, in their view, the request for the change is not based on "sound business reasons".
  • If you are in a partnership, all partners must choose the same fiscal year end. You cannot change the fiscal year end if one of the partners is a corporation or is in another partnership.

    If you do decide to use a business fiscal year end other than December 31st filing your taxes becomes more complex. Regardless of your business fiscal year end, the due date for your personal tax return is still June 15th and any taxes owed must be payed by April 30th, so if your business fiscal year end is not December 31st you must combine parts of the two business fiscal years, which may require estimating your income from your year-end to December 31.

    For this reason most sole proprietorships and partnerships choose a December 31st fiscal year end.  

    Corporations

    If your business is a corporation you can choose any date for your fiscal year end. If the corporation has a balance owing on its corporate income tax, for most corporations, that tax balance must be paid within two months after the end of the tax year (the fiscal year end), except for Canadian-controlled-private corporations, that may have three months to pay their income tax balance if certain conditions are met. See How to File Corporate Income Taxes in Canada for more information.

    In addition to federal business taxes you must pay provincial taxes in each province and territory. With the exception of Quebec and Alberta, provincial corporate taxes are administered by the Canada Revenue Agency and included on the federal tax return. Depending on where your business resides, use one of the following schedules to help you calculate your provincial/territorial taxes:

    If your place of business is in Alberta see the Corporate Income Tax section of the Treasure Board and Finance website for the appropriate forms for Alberta provincial taxes. For Quebec visit the Corporate Income Tax Return section of the Revenue Quebec website for corporate tax return forms and information. Filing and tax payment deadlines are similar to the CRA requirements.

    What If My Business Did Not Make Money and Owes no Taxes - Do I Still Have to File a Return?

    If your business is incorporated you are required to file a T2 tax return every year regardless of whether your company has tax payable or not.

     

    For sole proprietorships and partnerships you must file an individual return regardless of whether you had any business income to report. However, if your business is active you should fill in and include form T2125 with your personal tax return. Even if your business had no revenue you may have incurred business expenses, thereby generating a business loss which can be written off against personal income. For example, in addition to your regular job you start a small business on the side and in the first year (or few years) your business does not generate income but has startup expenses. These expenses can be written off against the income from your regular job. Note that there are limits to this, though. See 10 Red Flags That Will Get Your Canadian Small Business Audited.

    For information on filling out your first business income tax return see Your First Business Income Tax Return.

    Back to > Canadian Income Tax FAQ Index

    See also:

    Maximize Your Business Income Tax Deductions

    Canadian Income Tax and Your Small Business

    The Best Canadian Tax Software You Can Use

    Your First Business Income Tax Return